How to Import into the US

Question

Do I have to pay import duty on items that have been exported from the United States that are being returned?

Answer

If you have an item that was previously resident in the United States, but for some reason was exported and is now being returned, be sure to inform US Customs about its status. Items previously exported are often considered duty free! This means that although you might have to pay a small entry fee, your goods will not be assessed taxes as a percentage of their value.

The logic behind this duty free status is simple – US Customs wants importers to pay an import tax at least once on items not made in the United States. That means that in general you can claim a duty free status under chapter 98 of the US Harmonized Tariff Schedule on items that were either made in the USA, or had already been imported previously.

When might this apply?

This scenario might come into play if:

• one of your products was exported, used in a foreign country, and is now being returned;
• you’re exporting something for repair;
• your item was exported as an exhibit for a trade show or similar;
• your item is a “tool of trade” used abroad temporarily.

Gotcha’s to avoid:

• Just because your entry is duty free does not mean you can avoid filing import paperwork. You might also be subject to processing fees.
• If your item was “advanced in value” while overseas, you will probably owe duty on the value of the improvement. Example: you exported a car made in the US and had a French radio installed. When the car returns, you will owe duty on the value of the radio but not the car.
• Depending on the product, there may be a three year window between the exportation and duty free re importation of your item.

Sales Representatives

Overseas, a sales representative is the equivalent of a manufacturer’s representative in the United States. The representative uses the company’s product literature and samples to present the product to potential buyers. A representative usually handles many complementary lines that do not conflict. The sales representative usually works on a commission basis, assumes no risk or responsibility, and is under contract for a definite period of time (renewable by mutual agreement). The contract defines territory, terms of sale, method of compensation, reasons and procedures for terminating the agreement, and other details. The sales representative may operate on either an exclusive or a nonexclusive basis.

Agents

The widely misunderstood term “agent” means a representative who normally has authority, perhaps even a power of attorney, to make commitments on behalf of the firm he or she represents. Firms in the United States and other developed countries have stopped using the term and instead rely on the term “representative,” since agent can imply more than intended. It is important that any contract state whether the representative or agent does or does not have legal authority to obligate the firm.

Distributors

The foreign distributor is a merchant who purchases goods from a U.S. exporter (often at a substantial discount) and resells it for a profit. The foreign distributor generally provides support and service for the product, thus relieving the U.S. company of these responsibilities. The distributor usually carries an inventory of products and a sufficient supply of spare parts and also maintains adequate facilities and personnel for normal servicing operations. Distributors typically handle a range of non-conflicting but complementary products. End users do not usually buy from a distributor; they buy from retailers or dealers.

The terms and length of association between the U.S. company and the foreign distributor are established by contract. Some U.S. companies prefer to begin with a relatively short trial period and then extend the contract if the relationship proves satisfactory to both parties.

Foreign Retailers

A company may also sell directly to foreign retailers, although in such transactions, products are generally limited to consumer lines. The growth of major retail chains in markets such as Canada and Japan has created new opportunities for this type of direct sale. This method relies mainly on traveling sales representatives who directly contact foreign retailers, although results might also be achieved by mailing catalogs, brochures, or other literature. The direct mail approach has the benefits of eliminating commissions, reducing traveling expenses, and reaching a broader audience. For optimal results, a firm that uses direct mail to reach foreign retailers should support it with other marketing activities.

American manufacturers with ties to major domestic retailers may also be able to use them to sell abroad. Many large American retailers maintain overseas buying offices and use these offices to sell abroad when practical.

Joint Venture Partners

In some cases, joint ventures provide the best partner-like manner of obtaining foreign trade income. The firm then choses to begin a business relationship with a firm in the host country. International joint ventures are used in a wide variety of manufacturing, mining, and service industries and frequently involve technology licensing by the U.S. firm to the joint venture.

Export.gov Trade Leads Database

View announcements from qualified international companies looking to source U.S. products and services and advertise government tender projects through our trade leads database. All of our trade leads are pre-screened by our U.S. embassy or consulate staff overseas and are provided as a free service for U.S. exporters.

International Trade Opportunities Through the World Bank and the Multilateral Development Banks

Billions of dollars worth of international projects are funded every year through the World Bank and the various multilateral development banks (MLDBs). Learn what projects are upcoming in your industry and region of interest.

Direct Exporting

In this approach, the exporter handles every aspect of the exporting process from market research to foreign distribution and collections. A significant commitment of management time and attention is required, but this approach can maximize profits and sales growth. Most Direct Exporters take advantage of one or more sales and distribution channels in a given market by forming in-country business partnerships with agents, distributors and/or joint venture partners.

To learn about services designed to match U.S. companies with buyers and/or business partners, see the Partners and Trade Leads section

Exporting Indirectly Through Intermediaries

With this approach, a company engages the services of an Export Management Company (EMC), an Export Trading Company (ETC) or other intermediary capable of finding foreign markets and buyers for its products. The exporter retains considerable control but gets access to well-established expertise and trade contacts.

To Find Potential EMCs and ETCs:

Office of Export Trading Company Affairs – Promotes the formation and use of export trade intermediaries and development of joint export ventures by U.S. firms.

Indirect Exporting

Indirect exporting refers to strategies whereby a U.S. manufacturer or service provider seeks out domestic buyers who represent foreign end users or customers.

Many U.S. and foreign corporations, general contractors, foreign trading companies, foreign government agencies, foreign distributors and retailers, and others in the United States purchase U.S. products and services for direct export, or as a supplement to products/services they offer to foreign customers. In this case a company may know its product is being exported, but it is still the domestic buyer who assumes the risk and handles the details

The following documents are commonly used in exporting; but which of them are necessary in a particular transaction depends on the requirements of the U.S. government and the government of the importing country.

Shipper’s Export Declaration (SED or form 7525-V) The SED is available through the Government Printing Office and a number of other commercial outlets. It can be electronically filed using AESDirect.

A NAFTA Certificate of Origin is needed for shipments to Mexico and Canada. This tool can help you through the process of filing this certification.

CE Mark requirements must be met to market goods in the European Union. Once a manufacturer has earned a CE mark for its product, it may affix the CE Mark to its product, and then the product may be marketed thoughout the EU without having to undergo further modifications in each EU member country.

Export license – a U.S. Government document required for “dual use” exports (commercial items which could have military applications), or exports to embargoed countries. Most export transactions do not require specific approval from the U.S. Government. Before shipping your product, make sure you understand the concept of dual use and the basic export control regulations.

Commercial invoice – a bill for the goods from the seller to the buyer. These invoices are often used by governments to determine the true value of goods when assessing customs duties. Governments that use the commercial invoice to control imports will often specify its form, content, number of copies, language to be used, and other characteristics.

Certificate of origin – The Certificate of Origin is only required by some countries. In many cases, a statement of origin printed on company letterhead will suffice. Special certificates are needed for countries with which the United States has special trade agreements, such as Mexico, Canada and Israel. More information about filling out these special certificates is available from the TIC.

Bill of lading is a contract between the owner of the goods and the carrier (as with domestic shipments). For vessels, there are two types: a straight bill of lading which is non-negotiable and a negotiable or shipper’s order bill of lading. The latter can be bought, sold, or traded while the goods are in transit. The customer usually needs an original as proof of ownership to take possession of the goods.

Insurance certificate – is used to assure the consignee that insurance will cover the loss of or damage to the cargo during transit. These can be obtained from your freight forwarder.

Export packing list – considerably more detailed and informative than a standard domestic packing list, it itemizes the material in each individual package and indicates the type of package, such as a box, crate, drum, or carton. Both commercial stationers and freight forwarders carry packing list forms.

Import License – Import licenses are the responsibility of the importer. Including a copy with the rest of your documentation, however, can sometimes help avoid problems with customs in the destination country.

Consular invoice – Required in some countries, it describes the shipment of goods and shows information such as the consignor, consignee, and value of the shipment. If required, copies are available from the destination country’s Embassy or Consulate in the U.S.

Air way bills – Air freight shipments are handled by air waybills, which can never be made in negotiable form.

Inspection certification is required by some purchasers and countries in order to attest to the specifications of the goods shipped. This is usually performed by a third party and often obtained from independent testing organizations.

A dock receipt and a warehouse receipt are used to transfer accountability when the export item is moved by the domestic carrier to the port of embarkation and left with the ship line for export.

A destination control statement appears on the commercial invoice, and ocean or air waybill of lading to notify the carrier and all foreign parties that the item can be exported only to certain destinations.